Chapter One Section One Cornell Notes: Scarcity - The Basic Economic Problem Vocabulary: wants, needs, scarcity, goods, services, consumer, producer, factors of production, land, labor, capital, entrepreneurship
Explain the relationship between the terms in each of these pairs - wants:scarcity, consumer:producer, factors of production:entrepreneurship
What is the difference between needs and wants? Explain how a need may also be a want.
How does scarcity affect comsumers and producers?
Suppose you are moving into your first apartment and you only have $1,200 to spend on furnishings. Make a list of things you will buy with the $1,200. What did you give up t get the things you need? Why did you give up those wants?
Explain the relationship between the terms in each of these pairs - incentive:utility, trade-off:opportunity-cost, marginal cost:marginal benefit
Two movies are playing at the IMAX theatre near your home. You have a 1/2 price coupon for only one but you choose to pay full price for the other movie. How is this an example of economizing?
List (4) different examples of how you can spend time after school. Which option would you most often choose? What is the opportunity cost of your choice?
You are on a limited budget and planning a four-day camping trip to a national park. Bus fare is $75 each way and the ride takes 12 hours. Plane fare is $150 each way and the ride takes a 1 1/2 hours. Conduct a cost-benefit analysis to help you choose your method of travel. Why are all choices economic choices? Be specific.
Chapter One Section Three Cornell Notes: Analyzing Production Possibilities Vocabulary: production possibility curve, efficiency, underutilization, law of increasing opportunity costs
What economic data does PPC bring together?
Using the graph on p. 20, why do opportunity costs increase as you make more and more butte and fewer guns?
During a war, a country suffers massive devastation of its industry. How would the the country's PPC change from before the war to after the war? Sketch your own PPC to illustrate your answer.
Use the information to explain the law of increasing opportunity costs.
Bushels of Corn
(in thousands)
Television Sets
(in thousands)
10
0
9
1
7
2
4
3
0
4
Chapter One Section Four Cornell Notes: The Economics Toolbox Vocabulary: microeconomics, macroeconomics
In which category does each item below belong - microeconomics or macroeconomics? Why?
- Studying statistics to see how well the economy is doing at creating jobs or increasing exports
- Studying statistics on gasoline sales and hotel bookings to exlore the imact of higher gas prices on vacation plans Chapter Two Section One Cornell Notes: Introduction to Economic Systems Vocabulary: traditional economy, command economy, market economy
How are economic decisions made in a Command Economy?
What drives choices of consumers and producers in a market economy?
How is your own family and example of Traditional, Command and Market economies?
Chapter Two Section Two Cornell Notes: Command Economies Vocabulary: centrally planned economy, socialism, communism, authoritarian
What are the advantages and disadvantages of a centrally planned economy?
How is socialism different than communism?
During the 1980's, the Soviet Union introduced market elements into the economy. How might this explain the increase in household expenditures?
1979
$825.2 million
1981
$934.7 million
1983
$966.7 million
1985
$1,017.1 million
1987
$1,064.7 million
1989
$1,152.3 million
Chapter Two Section Three Cornell Notes: Market Economies Vocabulary: fundamentals of a market economies, circular flow model, product market, factor market
Explain the relationship between the terms in each of the pairs - specialization:profit, laissez-faire:capitalism, factor market:product market
How do you think the disadvantages of a market economy can be minimized while its advantages continue to operate?
Using the circular flow model, how do businesses benefit from the wages they pay?
On August 29th, 2005, Hurricane Katrina, devastated regions of the Gulf Coast states of Louisiana, Mississippi and Alabama. Most of New Orleans was flooded and large amounts of damage resulted in the levees breaking. How would a Market Economy respond to the devastation? How would a Command Market respond to the devastation?
Chapter Two Section Four Cornell Notes: Modern Economies in a Global Age Vocabulary: mixed economy, nationalize, privatize, global economy
Explain how the country you live in is an example of a Mixed Economy.
What forces have contributed to the growth of the global economy?
What is the expected impact when you transition from nationalized industry to a privatized industry and vice versa?
Chapter Three Section One Cornell Notes: Advanatges of the Free Enterprise System Vocabulary: free enterprise system, open opportunity, legal equality, free contract, profit motive
Explain the role of competition in a free market. Illustrate your answer with examples of (3) different businesses in your local economy.
In a 1973 magazine interview, Milton Friedman said, "What kind of society isn't structured on greed? The problem of social organization is how to set up an arrangement under which greed will do the least harm; capitalism is that kind of system." Do you agree with Friedman? Explain your answer.
Chapter Three Section Two Cornell Notes: How Does Free Enterprise Allocate Resources Vocabulary: profit, modified free enterprise economy
How does profit work motive work to allocate resources?
How do households, businesses and governments interact in the product and resource markets?
How is the circular flow model from Ch. 2 Sec. 3 different from the one in this chapter?
What industries in today's world do you think would be wise to make changes given consumers' preferences? Give reasons for your selections?
Chapter Three Section Three Cornell Notes: Government and Free Enterprise Vocabulary: market failure, public goods, free rider, infrastructure, externality, subsidy, safety net, transfer payment
Unemployment compensation and payment of living expenses for the disabled are examples of what kind of government involvement in the American economy?
After several incidents of hallway disputes among students, the board of a high school decides to hire hallway guards. In economic terms, what is the school board doing? How might this decision affect other programs at the school?
As part of the welfare reform of the mid-1990's, the Federal Government hired 10,000 people who had been dependent on welfare. How does this approach differ from transfer payments? What are the costs and benefits of this approach?
In 2003, Congress passed laws to encourage private charitable organizations to provide social services. They would compete for government funds to carry out community services through their own networks. Do you think this is an effective way to address social issues? Why or why not? Use concepts such as Socialism, Market Economies, Mixed Economies, Privatize and Nationalize to support your answer.
Chapter Four Section One Cornell Notes: What is Demand Vocabulary: demand, law of demand, demand schedule, market demand schedule, demand curve, market demand curve
List (3) products and the approximate price of each. Which of the products do you have a demand for? Consider the (2) requirements of demand as you answer the question.
Does quantity demanded always fall if the price rises? List several goods or services that you think would remain in demand even if the price rose sharply. Why does demand for those items change very little?
Create a market demand curve using the market demand schedule below. Write a brief explanation describing the curve and what it shows.
Price per Pair of Shoes ($)
Quantity Demanded
175
0
150
10
125
20
100
40
75
70
50
110
Chapter Four Section Two Cornell Notes: What Factors Affect Demand Vocabulary: law of diminishing marginal utility, income effect, substitution effect, change in quantity demanded, change in demand, normal goods, inferior goods, substitutes, complements
Explain the differences between each term - change in quantity demanded:change in demand, normal goods:inferior goods, income effect:substitution effect, substitutes:compliments
The U.S. government has used many strategies to reduce smoking. It has banned t.v ads for smoking, ran public service messages about the health risks of smoking and imposed taxes on cigarettes. Which factors which affect demand was the government trying to influence?
Use the market demand curve you created in Ch. 4 Sec. 1. Add a new curve showing how demand would be changed if a famous person (like Mr. Patel) endorsed a brand of shoes the store does not sell. Explain your reasoning.
Do you think changes in consumer taste are most often initiated by the consumers themselves or by manufacturers and advertisers? Explain your answer. Use real-life examples.
Chapter Four Section Three Cornell Notes: What is Elasticity of Demand Vocabulary: elasticity, of demand, elastic, inelastic, unit elastic, total revenue, total revenue test
How is total revenue related to elasticity of demand?
Why are elastic goods and services said to be price sensitive?
In early 2004, news articles reported that prescription drugs were rising almost three times faster than the prices of other products. Identify the factors that explain why the drug companies were able to raise prices so sharply.
Suppose the company which controls food and drinks at a local sports arena wants to increase revenue on the sales of soft drinks. The manager believes the only solution os to charge higher prices. As a business consultant, what advice would you give the manager? Use economic thinking to support your answer.
Determine the elasticity of bottled water. Is it elastic or inelastic? Which factors affect the demand for bottled water? What effect might the introduction of a new energy drink have on the demand for bottled water?
Number of Bottles Sold
Price ($)
35
2.00
75
1.50
100
1.25
120
1.00
Chapter Five Section One Cornell Notes: What is Supply Vocabulary: supply, law of supply,supply schedule, market supply schedule, supply curve, market supply curve
Why does a supply curve slope upward?
Think of (3) items you buy regularly for which the price has changed. How did this shift in price influence supply?
Create a market supply curve using the market supply schedule below. Write a brief explanation describing the curve and what it shows.
Price per Pair ($)
Quantity Supplied
500
600
425
450
350
325
275
225
200
150
125
100
Chapter Five Section Two Cornell Notes: What are the Costs of Production Vocabulary: marginal product, specialization, increasing returns, diminishing returns, fixed cost, variable cost, total cost, marginal cost, marginal revenue, total revenue, profit-maximizing output
Using the table below, find total costs, marginal costs, marginal revenue ($40), total revenue and profit
How does a business use marginal analysis to decide how many workers to employ?
Total Product
Fixed Cost ($)
Variable Cost ($)
0
500
0
25
500
800
50
500
1,200
100
500
1,800
175
500
2,550
275
500
3,350
350
500
4,250
400
500
5,750
Chapter Five Section Three Cornell Notes: What Factors Affect Supply Vocabulary: change in quantity supplied, change in supply, input costs, labor productivity, technology, excise tax, regulation
Explain the differences between the terms in each of these pairs: change in quantity supplied:change in supply, input costs:technology, excise tax:regulation
How does the expectation of a change in price affect supply? Use examples to explain your answer.
Use the supply curve you created in Ch. 5 Sec. 1 and add new supply curves showing how supply would be changed
- if the price of materials declines dramatically
- if a large manufacturer decides to stop selling the item
- if the government supports a substitute for the product
Chapter Five Section Four Cornell Notes: What is Elasticity of Supply Vocabulary: elasticity of supply
How is elasticity of supply similar to elasticity of demand? How is it different?
What is the difference between industries that have elastic supply and those that have inelastic supply?
Analyze the factors that determine elasticity of supply to explain why it is difficult for orange growers to respond quickly to changes in the price of orange juice.
Create a supply curve for the information below. What does the slope of this curve indicate about elasticity of supply?
Price ($)
Quantity Supplied of Smoothies
2.00
600
1.75
450
1.50
300
1.25
200
Chapter Six Section One Cornell Notes: Seeking Equilibrium - Demand and Supply Vocabulary: market equilibrium, equilibrium price, surplus, shortage, disequilibrium
Why do changes in demand or supply cause disequilibrium?
Suppose the government decides to increase the excise tax on cellular phone services by .01%. Would this cause the equilibrium price to rise or fall? Why?
Use the market demand and supply schedule below to create a market demand and supply curve, determine the equilibrium price, calculate shortage at every price and suggest ways the manufacturer could try to eliminate the surplus and raise the equilibrium price.
Price per Refrigerator (4)
Quantity Demanded
Quantity Supplied
225
500
6,000
200
1,000
4,500
175
1,500
3,500
150
2,500
2,500
125
4,000
1,500
Chapter Six Section Two Cornell Notes: Prices Signals and Incentives Vocabulary: competitive pricing, incentive
What the four characteristics of the price system? Please explain them.
How can the price system be used to allocate scarce resources?
Chapter Six Section Three Cornell Notes: Intervention in the Price System Vocabulary: price ceiling, price floor, minimum wage, rationing, black market
Explain the relationship between the terms in each of these pairs - price floor:minimum wage, rationing:black market
In the wake of sharply rising gasoline prices in the summer of 2005, several states considered putting a ceiling on the wholesale price of gasoline. What would be the likely result of such price control? Would it be an effective strategy for lowering gas prices? Why or why not?
Many states have laws against price gouging. These laws make it illegal to sell goods and services at levels significantly above established market prices following a natural disaster. What economic argument might be used against such laws?
Chapter Seven Section One Cornell Notes: What is Perfect Competition Vocabulary: market structure, perfect competition, imperfect competition
Why is it necessary to have a standardized product in order to have perfect competition?
Provide (2) examples of perfect competition and (2) examples of imperfect competition. What is the difference between the two economic ideas?
Suppose you went to a farmers market and found several different farmers selling cucumbers. Would you find a wide range of prices for cucumbers? Why or why not?
What would happen to a wheat farmer who tried to sell his/her wheat at $2.50 a bushel when the market price was $2.00 a bushel? Use economic reasoning to support your answer.
Chapter Seven Section Two Cornell Notes: The Impact of a Monopoly Vocabulary: monopoly, cartel, price maker, barrier to entry, natural monopoly, government monopoly, technological monopoly, geographic monopoly, economies of scale
What is the relationship of a natural economy and economies of scale? Support your answer using economic reasoning.
Complete the chart below
Example of Monopoly
Type of Monopoly
Why Do You Think So?
Interstate highway system
Electric utility company
The only bank in a small town
The company that received the patent for the frisbee
Describe some the techniques sellers use to differentiate their products? Provide detail in your answer.
In 2005 a major U.S. automaker announced a major discount plan for the month of June. It offered its customers the same price for cars it charged its employees. In July, two more U.S. automakers announced the same plan. What market structure does this example show? What are the characteristics of the market structure. Use economic reasoning to support your answer.
What type of market structures are most visible in your own community? Are you satisfied with the market structures you see or do you think some should be reconstructed with different market structures? Support your answer with economic reasoning.
Cause: Every market is perfectly competitive.
Effect: What would happen to consumer choices?
Cause: Every market is ruled by monopolistic competition.
Effect: What is the impact on the consumer?
Cause: Oligopolies control every market.
Effect: What is the impact on the town you live in?
Chapter Seven Section Four Cornell Notes: Regulation and Deregulation Today Vocabulary: regulation, deregulation, merger, price fixing, predatory pricing, cease and desist order, public disclosure
How does market allocation lead to reduced competition? Use economic reasoning to support your answer.
In the early 2000's a new form of marketing emerged called word-of-mouth advertising. Companies hired regular people to talk about the benefit of their products to others. What problems do you see with this type of marketing? Use economic reasoning to support your answer.
Chapter Eight Section One Cornell Notes: Sole Proprietorships Vocabulary: sole proprietorship, limited life, unlimited liability
What are the advantages and disadvantages of a sole proprietorship? Use economic reasoning to support your answer.
Explain how a sole proprietorship relies on the ideas of free enterprise. Use economic reasoning to support your answer.
Chapter Eight Section Two Cornell Notes: Forms of Partnerships Vocabulary: partnership, general partnership, limited partnership, limited liability partnership
What are the advantages and disadvantages of a partnership? Use economic reasoning to support your answer.
If you were looking to start a business as as a partnership, what characteristics would you look for? List (5) characteristics and list the reasons for each. Consider your answer for #1 when deciding what is important to you when staring a business partnership.
Chapter Eight Section Three Cornell Notes: Corporations, Mergers and Multinationals Vocabulary: corporation, stock, dividend, public company, private company, conglomerate
What ways would a vertical merger of an oil company influence gas prices? Use economic reasoning to support your answer.
Using the data below, what would be the impact of a horizontal merger between the two largest bottled water manufacturers?
Company
Annual Sales
% Market-share
Nature's Spring
$1,000,000
25%
Well Water Inc
$600,000
15%
Best Taste
$400,000
10%
Empryean Isles
$400,000
10%
No Tap Water
$200,000
5%
Chapter Eight Section Four Cornell Notes: Franchises, Co-ops and Non-Profits Vocabulary: franchise, cooperative, non-profit organization
What are the advantages and disadvantages of a franchise? Compare the advantages and disadvantages to a sole proprietorship and partnership. Which would best suit your own personal business needs?
Chapter One Section One Cornell Notes: Scarcity - The Basic Economic Problem
Vocabulary: wants, needs, scarcity, goods, services, consumer, producer, factors of production, land, labor, capital, entrepreneurship
Chapter One Section Two Cornell Notes: Economic Choice Today - Opportunity Cost
Vocabulary: incentives, trade-off, opportunity-cost, cost-benefit analysis, marginal cost, marginal benefit
Chapter One Section Three Cornell Notes: Analyzing Production Possibilities
Vocabulary: production possibility curve, efficiency, underutilization, law of increasing opportunity costs
(in thousands)
(in thousands)
Chapter One Section Four Cornell Notes: The Economics Toolbox
Vocabulary: microeconomics, macroeconomics
- In which category does each item below belong - microeconomics or macroeconomics? Why?
- Studying statistics to see how well the economy is doing at creating jobs or increasing exports- Studying statistics on gasoline sales and hotel bookings to exlore the imact of higher gas prices on vacation plans
Chapter Two Section One Cornell Notes: Introduction to Economic Systems
Vocabulary: traditional economy, command economy, market economy
Chapter Two Section Two Cornell Notes: Command Economies
Vocabulary: centrally planned economy, socialism, communism, authoritarian
Chapter Two Section Three Cornell Notes: Market Economies
Vocabulary: fundamentals of a market economies, circular flow model, product market, factor market
Chapter Two Section Four Cornell Notes: Modern Economies in a Global Age
Vocabulary: mixed economy, nationalize, privatize, global economy
Chapter Three Section One Cornell Notes: Advanatges of the Free Enterprise System
Vocabulary: free enterprise system, open opportunity, legal equality, free contract, profit motive
Chapter Three Section Two Cornell Notes: How Does Free Enterprise Allocate Resources
Vocabulary: profit, modified free enterprise economy
Chapter Three Section Three Cornell Notes: Government and Free Enterprise
Vocabulary: market failure, public goods, free rider, infrastructure, externality, subsidy, safety net, transfer payment
Chapter Four Section One Cornell Notes: What is Demand
Vocabulary: demand, law of demand, demand schedule, market demand schedule, demand curve, market demand curve
Chapter Four Section Two Cornell Notes: What Factors Affect Demand
Vocabulary: law of diminishing marginal utility, income effect, substitution effect, change in quantity demanded, change in demand, normal goods, inferior goods, substitutes, complements
Chapter Four Section Three Cornell Notes: What is Elasticity of Demand
Vocabulary: elasticity, of demand, elastic, inelastic, unit elastic, total revenue, total revenue test
Chapter Five Section One Cornell Notes: What is Supply
Vocabulary: supply, law of supply,supply schedule, market supply schedule, supply curve, market supply curve
Chapter Five Section Two Cornell Notes: What are the Costs of Production
Vocabulary: marginal product, specialization, increasing returns, diminishing returns, fixed cost, variable cost, total cost, marginal cost, marginal revenue, total revenue, profit-maximizing output
Chapter Five Section Three Cornell Notes: What Factors Affect Supply
Vocabulary: change in quantity supplied, change in supply, input costs, labor productivity, technology, excise tax, regulation
- Explain the differences between the terms in each of these pairs: change in quantity supplied:change in supply, input costs:technology, excise tax:regulation
- How does the expectation of a change in price affect supply? Use examples to explain your answer.
- Use the supply curve you created in Ch. 5 Sec. 1 and add new supply curves showing how supply would be changed
- if the price of materials declines dramatically- if a large manufacturer decides to stop selling the item
- if the government supports a substitute for the product
Chapter Five Section Four Cornell Notes: What is Elasticity of Supply
Vocabulary: elasticity of supply
Chapter Six Section One Cornell Notes: Seeking Equilibrium - Demand and Supply
Vocabulary: market equilibrium, equilibrium price, surplus, shortage, disequilibrium
Chapter Six Section Two Cornell Notes: Prices Signals and Incentives
Vocabulary: competitive pricing, incentive
Chapter Six Section Three Cornell Notes: Intervention in the Price System
Vocabulary: price ceiling, price floor, minimum wage, rationing, black market
Chapter Seven Section One Cornell Notes: What is Perfect Competition
Vocabulary: market structure, perfect competition, imperfect competition
Chapter Seven Section Two Cornell Notes: The Impact of a Monopoly
Vocabulary: monopoly, cartel, price maker, barrier to entry, natural monopoly, government monopoly, technological monopoly, geographic monopoly, economies of scale
Chapter Seven Section Three Cornell Notes: Other Market Structures
Vocabulary: monopolistic competition, product differentiation, non-price compeititon, oligopoly, market share, start-up costs
Chapter Seven Section Four Cornell Notes: Regulation and Deregulation Today
Vocabulary: regulation, deregulation, merger, price fixing, predatory pricing, cease and desist order, public disclosure
Chapter Eight Section One Cornell Notes: Sole Proprietorships
Vocabulary: sole proprietorship, limited life, unlimited liability
Chapter Eight Section Two Cornell Notes: Forms of Partnerships
Vocabulary: partnership, general partnership, limited partnership, limited liability partnership
Chapter Eight Section Three Cornell Notes: Corporations, Mergers and Multinationals
Vocabulary: corporation, stock, dividend, public company, private company, conglomerate
Chapter Eight Section Four Cornell Notes: Franchises, Co-ops and Non-Profits
Vocabulary: franchise, cooperative, non-profit organization